By 2020, smart personalization engines used to recognize customer intent will enable digital businesses to increase their profits by up to 15% – Gartner Magic Quadrant for Digital Commerce

The concept of personalization is being thrown around in digital commerce circles a lot these days. It seems that every digital commerce site considers it essential in their go-forward strategy when considering ways to increase revenue from online shoppers. Additionally, if done well, the theory goes, personalization drives loyalty and loyalty drives return business.

What Exactly does Personalization Mean?

Personalization falls into four basic categories:

Contextual – Relevant products appearing in banners, or presented as up-sells and cross-sells
Demographic – Recommendations based on the behavior of similar shoppers
Behavioral – Recommendations based on previous purchases
Remarketing – Products and services viewed on one site, pop-up on other sites as shoppers browse

When Personalization Works – examples

Contextual

Recently I was buying a carpet online, a gorgeous 8×10 area rug for my living room. In the past, I have never put a pad under my rugs, because frankly, I never thought of it. However, as I was scrolling through the page, I saw the “Frequently bought together” section and saw recommendations for non-skid rug pads. I gave it some thought, decided it was a good idea, and put one in my cart. Because the site was personalizing my experience, I was presented with an additional item that made sense for me to purchase. Just like that, I shelled out $30 I had no intention of spending.

Demographic

Filling out surveys for the sites shoppers visit is one way online retailers gain insight into their varying shopper personas. As a result, digital commerce marketers can effectively show products that other people with similar demographics have also purchased. For example, since I live in the northeast, I see more winter merchandise as the seasons change, whereas Floridians, will probably never see these products, unless they search for them specifically.

Behavioral

Have you ever clicked on Amazon’s homepage while logged into your account? I have, and based on the shopping I’ve done there in the past, one of the things I see is “Top Categories for You.” We all know that there are a lot of categories on Amazon, but based on my past shopping and browsing behavior, I am presented with Health & Household, Beauty & Personal Care and Home & Kitchen as my top three categories. I’m guessing that if my twenty-five year old son logged in, he’d see very different results.

Remarketing

I look at a lot of shoes online. I was on one shoe site looking for a pair of red wedgies but wasn’t finding exactly what I wanted. Eventually I abandoned my search. Then a funny thing happened. I was on Facebook, and a really nice pair of red wedgies popped up. I thought they were cute, but didn’t act on it right away. The next day, I was reading an online newspaper, and there on the right side of my browser, were the same cute shoes. They were following me. By the third day of the shoes popping up all over the sites I browse, I clicked the link – which brought me back to the original shoe site and I ordered them.

When Personalization Doesn’t Work

As great as personalization can be, it is important to take the “creep factor” into consideration.

Sometimes personalization becomes invasive. I’m sure we have all been targeted to purchase products because we bought something similar for someone else. Just because I bought a series of young children’s books for a friend’s child, doesn’t mean that I need to see this genre as a “recommended item.” Frankly, I find that level of personalization/recommendation creepy. Perhaps a better algorithm would base my recommendations off of a minimum threshold of similar searches, instead of automating every search as the basis for my recommendations. It is imperative that this is taken into account or you run the risk of losing that return shopper for good.

Another example is the “10% off your first purchase” pop-up. If I fill out the pop-up, the website begins the process of collecting data about me that in turn can be used for personalization. When I visit an eCommerce website for the first time, I do not want to be instantly presented with a pop-up to sign-up for their mailing list or receive a new customer discount. Let me decide if I like what you are selling before you bombard me with pop-ups hawking 10% off my first purchase. 10% of zero is zero – and if you recruit me for a special offer, before I know you – then you’ve already lost me. I don’t believe that most people want to share their personal information with a site they have never visited before and might not even carry what the shopper wants. My instinct is to close that window or hit the back button, and go to the next site in my Google search. If I’m interested in getting email from you with new offers, etc., ask me at checkout. I’m much more invested at that point.

The Basics of Customer Retention

If a shopper feels that their digital commerce retailer is taking care of them because of good personalized experiences, there is a greater chance of them returning to their website – and we all know that a returning customer is worth more than a new one. Loyalty is key, and personalization plays a role in creating it.

However, personalization is just one factor in creating customer retention. In order to create the best possible customer journey, there are some basic principals that are critical and should demand your attention first.

Usability, without question, is the most important factor in a shopper’s experience on your site. Ask yourself questions like:

How easy is it to navigate around the site?

How long does it take for pages to load? Too long for your shoppers to stick around?

How do you look and perform on mobile?

Does your site support responsive design so that it renders properly on a mobile device?

Do you have an app?

You are not only a digital commerce professional, but I am sure you are also a shopper. Ask yourself, would you shop on your site?

Search is the critical component in usability. When people come to your site, they want to find the products they are looking for and they want to find them instantly. A natural language search engine can be tailored to your site to ensure customers find the right products the first time every time. As we move to mobile devices, more and more people are talking instead of typing into their devices and this functionality mandates a natural language search engine. Voice activated searches require an engine that understands both the content of what is being asked as well as the context in which it is asked. This is the fundamental difference between natural language processing and keyword search.

The largest area of revenue growth and opportunity within digital commerce is mobile commerce and the ideal shopping experience is one requiring little to no typing. Amazon Alexa, Siri and OKGoogle have paved the way for 1 button, voice search. According to Mike Lowndes of Gartner, the trend is toward “conversational commerce uses which uses natural language interfaces (such as voice) to interact with brands, services and bots, thereby enabling transactions.”

Remember that revenue is tied to the customer’s experience. Without solving for the basics first, that experience will either draw shoppers in or drive them away.

The Value of a Returning Customer

In case you suspected that a returning customer is more valuable than an existing one. This article from Business Insider quotes a new report from Monetate that quantifiably reveals the value of returning customers:

Returning visitor transactions equaled $2.7 billion in the fourth quarter of 2015, almost double what new shoppers spent in that time period

New online shoppers are only half as likely as returning customers to place an item in their cart

New visitors have higher bounce rates. Those shoppers leave 34.8% of the time compared to 24.4% for returning shoppers

Returning visitors have a higher conversion rate at 4.5% compared to 2.4% for new visitors

Clearly the investment in providing shoppers with a stellar customer journey is worth every penny. And don’t forget, if one shopper has a consistently excellent experience, they are likely to share that information with friends and family.

In Conclusion

Today’s online shopper has a lot of choices on where they will spend their money. Retaining existing shoppers and garnering new ones requires that your website exceeds their needs and offers them an outstanding customer journey. Implementing personalization is a great way to enhance your site, as long as it is done well. However, unless the basic foundation of usability and search are in place, your personalization strategy may fall flat.